TenQ

The PENN Entertainment story

PENN Entertainment runs regional casinos and online gaming, with the central question whether Hollywood iCasino and Canada can make its digital business profitable after the ESPN exit.

Written from PENN Entertainment's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $15.24share price, last close
  • $2.0Bmarket value
  • 14/36TenQ Score checks passed
  • 14.7%growth a year the price assumes

The story in brief

  • Casinos set records. Retail revenue reached a quarterly record of $1.5 billion in the quarter to June 2026, with Adjusted EBITDAR of $517.2 million.
  • Digital losses narrowed. Interactive reported an Adjusted EBITDA loss of $9.5 million in the quarter to June 2026 as U.S. Hollywood iCasino achieved record quarterly revenue.
  • Leases complicate leverage. Traditional net leverage fell to 2.9x at June 2026 from 4.5x at December 2025, but leverage including leases was 5.9x.

What drives the business

  • PENN’s regional casino network included 42 gaming and racing properties in 19 states at December 2025, spanning the Northeast, South, West and Midwest segments.
  • The U.S. sportsbook agreement with ESPN ended on December 1, 2025, and PENN rebranded the offering as theScore Bet while shifting its digital focus toward U.S. iCasino and Canadian operations.
  • Its strategy connects casinos, online gaming and sports media through PENN Play, which had over 34 million members in the August 2026 release, and theScore media app, with approximately 4 million monthly active users across North America reported in the annual filing.
  • Retail generated an Adjusted EBITDAR margin of 34.4% in the quarter to June 2026, when the new Hollywood Columbus hotel tower and Hollywood Casino Aurora opened with encouraging early VIP visitation.
  • Interactive revenue was $349.4 million in the quarter to June 2026, including a tax gross up of $185.5 million, with growth supported by Hollywood iCasino and Ontario online sports betting.

What the price assumes

At $15.24, the reverse DCF implies free cash flow after stock pay growing 14.7% a year for ten years, using a 10.2% discount rate.

That exceeds both the 9.3% annual revenue growth delivered over the last 10 years and the TenQ check’s 6.6% bar, which slows that record halfway toward 4%; revenue stands in for a free cash flow growth record, so the comparison is not like for like.

Over the last twelve months, PENN generated $96 million of free cash flow alongside $61 million of stock compensation, while revenue growth was 6.1%.

Value PENN on your own assumptions

What could change the story

  • Most casino real estate is leased, primarily from Gaming and Leisure Properties, and cash payments to that landlord and VICI totaled $247.1 million in the quarter to June 2026, an obligation excluded from segment Adjusted EBITDAR.
  • Net income of $32.6 million in the quarter to June 2026 contrasts with a net margin of -12.7% over the last twelve months, leaving sustained profitability unproven.
  • Despite refinancing and extending credit facilities, PENN had $2.8 billion of total debt against $887 million of cash and short-term investments, and failed TenQ’s liquidity and interest coverage checks.
  • Share repurchases of $239 million over the last twelve months exceeded free cash flow of $96 million, putting cash returns in tension with debt reduction.

What to watch next

  • Management said favorable Retail and Interactive trends continued through July 2026 and that Interactive remained on track for previously stated goals, making the remaining $9.5 million Adjusted EBITDA loss a key comparison for the next release.
  • The next results can show whether Hollywood iCasino growth and the July 2026 Alberta launches translate into stronger Interactive earnings, alongside revenue separated from the tax gross up.
  • Retail margins, contributions from Hollywood Columbus and Aurora, free cash flow and leverage including leases will show whether the completed projects are strengthening cash generation after rent and investment spending.

Sources

Back to the PENN report